The Financial Crisis Blog 20 Gennaio 2009

Markets are getting “out of control” - Three important news over the past weekend reveal a nearing showdown in the economy, supporting my predictions for a meltdown in markets around April.

Over the past week three important events occurred. This gives further support to my prediction on the nearing global economic meltdown. My analysis predict a meltdown in the bond and currency markets starting in April, early May 2009. This will be relatively shortly, after first volatile events will most likely take place in February. In case that I am correct on this and those events, like e.g. high volatility in the gold market with peaks over 1000$ a occur, then market failures in currency and bond markets are very likely to follow. Under these aspects, I predict these failures to start in April or early May.

Here is a short summary of the news supporting this scenario:

1. Two further bank failures in the US</country-region><//country-region>, accompanied with nearing bankruptcy of California show that US financing problems are deepening. The bankruptcy of banks can not be stopped and rescue plans prove to be completely ineffective.

2. Anglo Irish bank and the Irish government have frozen deposits above 20 million Euro, after the bank has been fully nationalized. This shows that not event governmental control brings in the required security and causes governments to access capital rights of people. It is very likely that this model of accessing capital rights will very fast widespread and implemented in all other EU countries. (We recall that the same happened with the Irish move to secure deposits). That means investors will become unable to reposition cash into long lasting assets.
3. The Bail out plan performed by the UK</place><//place></country-region><//country-region> government proves to be useless. RBS reported extreme losses above 20 billion pound, the largest in UK</place><//place></country-region><//country-region> history. A new plan to guarantee assets is important

A new (fourth) message reached markets this morning, Monday the 19th. It appears that certain asset markets are now picking up such a momentum, that the volumes which are traded outperform anything, seen ever before. The volume frightened some of the traders, who made statements about this on CNBC, revealing a link to most likely the Future markets.

In summary, my prediction is that:

We will see collapse of the markets starting in February and then entering a hot phase in April. Governments will have to increase their attempts to step-up and freeze asset classes and deposits, by accessing capital rights of people.

Source >  The Financial Crisis Blog | Jan 19